UPDATE 1-Gammon Gold's quarterly output climbs

Reuters Staff

2 Min Read

* Q2 gold equivalent production up 4.8 pct

* Higher output from Ocampo mine helps boost production

TORONTO, July 15 (Reuters) - Canadian junior Gammon Gold GAM.TO said on Thursday its second-quarter gold production rose, as increased output from its Ocampo mine in Mexico helped offset the impact of the shutdown at its El Cubo mine.

The company produced 49,379 gold equivalent ounces in the quarter, up 4.8 percent from a year earlier, when a 7-week labor-related disruption at El Cubo held back output.

Last month, Gammon said it dismissed 397 of its unionized workers and indefinitely suspended operations at its El Cubo in respoonse to a fresh dispute over a profit-sharing agreement. [ID:nN17219620]

Gammon said it redeployed about 150 contract workers from El Cubo to Ocampo, as well as some underground mining equipment.

The Halifax-based company plans to use the redeployed workers and equipment to expand its underground mining operations at Ocampo.

The company has forecast output of 100,000 to 110,000 ounces of gold and 4.4 million to 4.95 million ounces of silver from Ocampo in 2010. This translates into roughly 180,000 to 200,000 gold equivalent ounces, at total cash costs of $425 to $450 per gold equivalent ounce. ($1= $1.03 Canadian) (Reporting by Euan Rocha; Editing by Frank McGurty)